South Carolina General Assembly
106th Session, 1985-1986

Bill 462


                    Current Status

Bill Number:               462
Ratification Number:       372
Act Number:                353
Introducing Body:          Senate
Subject:                   Relating to real estate brokers,
                           counsellors, salesmen, appraisers, property
                           managers, examinations, licensing, and
                           commission rulings and decisions
View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A353, R372, S462)

AN ACT TO AMEND SECTIONS 40-57-20, 40-57-100, 40-57-110, 40-57-150, 40-57-170, AND 40-57-180, ALL AS AMENDED, AND 40-57-10, 40-57-30, 40-57-40, 40-57-90, 40-57-120, 40-57-160, AND 40-57-240, RELATING TO REAL ESTATE BROKERS, COUNSELLORS, SALESMEN, APPRAISERS, PROPERTY MANAGERS, EXAMINATIONS, LICENSING, AND COMMISSION RULINGS AND DECISIONS, SO AS TO PROVIDE ADDITIONAL PREREQUISITES FOR THE EXAMINATION AND LICENSING OF PROPERTY MANAGERS, TO AUTHORIZE THE COMMISSION TO ESTABLISH AN APPLICATION FEE, TO CLARIFY PROVISIONS RELATING TO REAL ESTATE AUCTIONEERS; TO AUTHORIZE THE COMMISSION TO ASSESS FINES FOR MISREPRESENTATIONS AND OTHER INFRACTIONS AND TO ISSUE SUBPOENA AND CEASE AND DESIST ORDERS, TO DEFINE BROKER TO INCLUDE A PERSON WHO NEGOTIATES OR SOLICITS REFERRALS AND DEFINE BROKER-IN-CHARGE, PROPERTY MANAGER, AND PROPERTY MANAGER-IN-CHARGE, TO PROVIDE THAT THE PROVISIONS OF THE CHAPTER DO NOT APPLY TO TRANSACTIONS INVOLVING RENTAL OR LEASING OF REAL ESTATE BY THE OWNER, TO REQUIRE THAT ALL PERSONS LICENSED BY THE COMMISSION SUBMIT A CREDIT REPORT, TO PROVIDE THAT PROPERTY MANAGER IS AN ADDITIONAL LICENSE CLASSIFICATION AND THAT NO PERSON BE LICENSED IN MORE THAN ONE CLASSIFICATION, TO PROHIBIT INDUCEMENTS BY LICENSEES IN THE SALE OF REAL ESTATE, TO PROVIDE NOTICE TO THE COMMISSION OF CIVIL OR CRIMINAL ACTIONS AND JUDGMENTS, TO INCREASE THE PENALTY FOR FAILURE TO RENEW A LICENSE TO DEAL IN REAL ESTATE TRANSACTIONS FROM AN AMOUNT NOT TO EXCEED ONE HUNDRED DOLLARS TO FIVE HUNDRED DOLLARS AND INCREASE THE MAXIMUM PRISON TERM FROM THIRTY DAYS TO SIX MONTHS, TO PROVIDE A PENALTY FOR FAILURE TO HAVE A REAL ESTATE LICENSE, AND TO AMEND THE 1976 CODE BY ADDING SECTION 40-57-250 SO AS TO PROVIDE FOR AN ADMINISTRATIVE FINE.

Be it enacted by the General Assembly of the State of South Carolina:

Definitions

SECTION 1. Section 40-57-10 of the 1976 Code is amended to read:

"Section 40-57-10. As used in this chapter:

(1) 'Broker' means any person who for a fee, commission, or other valuable consideration, or with the intent or expectation of receiving a fee, commission, or consideration, negotiates or attempts to negotiate the listing, sale, auction, purchase, exchange, or lease of any real estate or of the improvements thereon, or negotiates or attempts to negotiate, or solicits or attempts to solicit a referral with respect to the foregoing activities, or collects rents or attempts to collect rents, or who acts as an appraiser, or who advertises or holds himself out as engaged in any of the foregoing activities. The term includes the activity provided in subsections (3) and (4) of this section. The term also includes any person employed by or on behalf of the owner of real estate to conduct the sale, auction, leasing, appraisal, or other disposition thereof at a salary or for a fee, commission, or any other consideration. It also includes any person who engages in the business of charging an advance fee or contracting for collection of a fee in connection with any contract whereby he undertakes primarily to promote the sale of real estate through its listing in a publication issued primarily for such purpose, or for referral of information concerning such real estate to brokers, or both.

(2) 'Broker-in-charge' means the broker who is designated as having the responsibility over the actions of all brokers, salesmen, and property managers licensed under him and also the responsibility, control, and liability over any real estate trust or escrow accounts.

(3) 'Salesman' means any person employed or engaged under contract by or on behalf of a licensed broker to participate in any activity included in subsection (1) of this section for compensation or otherwise. The term includes activity provided in subsection (4) of this section.

(4) 'Property manager' means any person who for a fee, commission, or other valuable consideration, or with the intent or expectation of receiving a fee, commission, or consideration, negotiates, or attempts to negotiate the rental, exchange, or leasing of any real estate or of the improvements thereon; or the listing of exchanges, rentals, or leases; or collects rents or attempts to collect rents; or who advertises or holds himself out as engaged in any of the foregoing activities.

The term also includes any person who engages in the business of charging an advance fee or contracting for collection of a fee in connection with any contract whereby he undertakes to promote the renting or leasing through its listing in a publication issued primarily for this purpose, or for referral of information concerning the rentals or leases.

An employee of the owner of rental property may perform the following duties without securing a property manager license. Such employee to be exempt from licensing is restricted as follows:

1. Must be an employee of the owner whose compensation for services shall be on a salary basis and not on a commission basis.

2. Employee may only exhibit a rental property to prospective tenants, accept applications for leases and furnish such prospective tenants with information relative to the rental of such units. The activities must be further restricted as follows:

(a) No binding contracts may be negotiated, drawn, or signed by the employee.

(b) The employee may only accept and receipt for rental payments or deposits that are made payable to the owner.

(c) The employee may not hold himself out as a property manager.

(5) 'Property manager-in-charge' means the property manager who is designated as having the responsibility over the actions of all property managers licensed under him and also the responsibility, control, and liability over any real estate trust or escrow accounts.

(6) 'Person' means individuals, corporations, partnerships, or associations, foreign and domestic.

(7) 'Real estate' means leaseholds, as well as any other interest in land, whether corporeal, incorporeal, freehold, or nonfreehold, and whether the real estate is situate in this State or elsewhere."

Penalties

SECTION 2. Section 40-57-20 of the 1976 Code is amended to read:

"Section 40-57-20. It shall be unlawful for any person to act as a real estate broker, counsellor, real estate salesman, appraiser, property manager, or real estate auctioneer, or to advertise or assume to act as such without first having obtained a license issued by the Real Estate Commissioner. Any person violating this provision is guilty of a misdemeanor, and upon conviction, must be punished by a fine of not more than five hundred dollars, or by imprisonment for a term of not more than six months, or both, in the discretion of the court."

Provisions not to apply

SECTION 3. Section 40-57-30 of the 1976 Code is amended to read:

"Section 40-57-30. The provisions of this chapter do not apply to any transaction involving the sale, rental, or leasing of real estate by anyone who is the owner thereof or who owns any interest therein, if the legal ownership interest in the real estate being sold, rented, or leased is identical to the owner's legal interest, or to the attorney at law of the owner acting within the scope of his duties. Ownership of stock in a corporation is not ownership of an interest in real estate owned by the corporation and does not exempt the stockholder from the provisions of this chapter, unless the stockholder owns or controls at least ten percent of the stock of the corporation."

Applicability

SECTION 4. Section 40-57-40 of the 1976 Code is amended to read:

"Section 40-57-40. The provisions of this chapter are applicable only to those persons holding themselves out to the public as real estate brokers, counsellors, appraisers, auctioneers, real estate salesmen and property managers and shall not apply to agencies and instrumentalities of the state or federal government nor to employees of any lender or public officials making appraisals for federal, state, and local units of the government."

Licenses

SECTION 5. Section 40-57-90 of the 1976 Code is amended to read:

"Section 40-57-90. Licenses as real estate broker, counsellor, real estate salesman, appraiser, auctioneer, or property manager must be granted only to residents of this State, who submit satisfactory proof to the Commissioner that they are trustworthy and bear a good reputation for honesty and fair dealing, and are competent to transact the business of a real estate broker, counsellor, real estate salesman, appraiser, auctioneer, or property manager in such manner as to safeguard the interest of the public. Any person applying for any license or any examination shall first submit to a credit report and satisfy any requirements as established by regulation. A real estate salesman must be employed by a real estate broker-in-charge in order to be licensed."

Application

SECTION 6. Section 40-57-100 of the 1976 Code, as last amended by Act 136 of 1981, is further amended to read:

"Section 40-57-100. (1) Any person desiring to act as a real estate broker, counsellor, salesman, appraiser, property manager, or auctioneer shall file with the Real Estate Commissioner an application in writing upon such form and with such detail as the South Carolina Real Estate Commission prescribes, and each applicant shall first pass to the satisfaction of the Commissioner the examination prescribed, unless he is exempt therefrom.

(2) Prerequisites for taking an examination for the broker's license are a minimum of three years of actual experience immediately preceding application as a licensed real estate salesman in this State or in another state having similar requirements and successful completion of at least ninety hours of instruction, including time spent on examinations. The ninety hours include the required sixty hours of instruction for a real estate salesman's license in the basic fundamentals of real estate and other related matters, all as specified by the Real Estate Commission and conducted by:

(a) a university or duly accredited college wherever situated if the credits were earned within five years prior to license application. For purposes of computing required hours of classroom instruction, one credit equals ten classroom hours; or

(b) a bona fide business school situated in this State and approved by the Commission; or

(c) an institution, organization, or association approved by the Commission; or

(d) correspondence where the course of instruction is part of an extension department of an accredited college or university.

(3) In lieu of the above prerequisites for the taking of a broker's license examination, an applicant may furnish to the Commission evidence of one of the following:

(a) a baccalaureate degree with a major in real estate from an accredited college or university, or a Juris Doctor or Bachelor of Laws degree;

(b) proof acceptable to the Commission of at least five years of equivalent experience preceding license application in business activities closely related to real estate transactions.

(4) Upon satisfactorily passing the broker's examination, the applicant shall apply for his broker's license within ninety days from the examination date. Failure to do so will result in the applicant being required to reapply and be reexamined for his broker's license.

(5) As a prerequisite to taking the first year real estate sales examination, every applicant shall furnish evidence satisfactory to the Real Estate Commission of successful completion of thirty classroom hours of instruction in the fundamentals of real estate as prescribed by subsection (2). Upon passing the first year real estate sales examination, a first year real estate sales license must be immediately issued.

(6) Within one year of passing the first year exam each applicant shall satisfactorily complete an additional thirty hours of instruction in order to qualify for the final sales examination. The applicant also shall have held his first year real estate sales license in an active status for no less than a total of twelve months prior to taking the final sales examination and his license must be active at the time of taking the examination. The final sales examination must be taken not less than twelve nor more than fifteen months following the first year examination. Failure to meet these requirements will result in the cancellation of the first year sales license.

(7) In lieu of the classroom hours required for a final sales license, an applicant may furnish to the Commission one of the following:

(a) satisfactory evidence of at least three years' experience within the past five years in real estate transactions acceptable to the Commission;

(b) evidence that he has successfully completed at least six credit hours in real estate or real estate related subjects at an accredited college or university;

(c) evidence of a Juris Doctor or Bachelor of Laws degree.

(8) As a prerequisite to taking the property manager's examination, every applicant shall furnish evidence satisfactory to the Real Estate Commission of successful completion of thirty classroom hours of instruction in the fundamentals of real estate property management, all as specified by the Real Estate Commissioner and conducted by:

(a) a university or duly accredited college wherever situated, if the credits were earned within five years prior to license application. For purposes of computing required hours of classroom instruction, one credit equals ten classroom hours; or

(b) a bona fide business school situated in this State and approved by the Commission; or

(c) an institution, organization, or association approved by the Commission; or

(d) correspondence where such course of instruction is part of an extension department of an accredited college or university.

(9) In lieu of the above prerequisites for the taking of a property manager's license examination, an applicant may furnish to the Commission evidence of one of the following:

(a) a baccalaureate degree with a major in real estate from an accredited college or university, or a Juris Doctor or Bachelor of Laws degree;

(b) satisfactory evidence of at least three years' experience within the past five years in business activities closely related to real estate property management transactions."

Written examination

SECTION 7. Section 40-57-110 of the 1976 Code, as last amended by Act 136 of 1981, is further amended to read:

"Section 40-57-110. In addition to the proof of honesty, integrity, truthfulness, and good reputation of an applicant for a license, either real estate broker, counsellor, salesman, appraiser, property manager, or auctioneer, the applicant shall submit to a written examination to be prepared and conducted by the Commissioner or an institution designated by the Commission."

Classifications of licenses

SECTION 8. Section 40-57-120 of the 1976 Code is amended to read:

"Section 40-57-120. The Commissioner shall issue licenses for three classifications: one for each real estate broker; one for each real estate salesman; and one for each property manager. The Commissioner shall issue designated licenses within each classification as necessary and as established by regulation. No person may be licensed in more than one classification at any one time."

License and application fees

SECTION 9. Section 40-57-150 of the 1976 Code, as last amended by Act 311 of 1984, is further amended to read:

"Section 40-57-150. The Real Estate Commission is authorized to establish license and application fees by regulation. None of the license fees provided for is in lieu of any business license fees or taxes imposed by a municipality. In addition to the fees authorized by this section, the Commission is authorized to contract with a state-funded institution of higher learning to conduct examinations for the Commission and the institution is authorized to charge and collect examination fees, not to exceed the reasonable cost to conduct examinations, which must be retained by the institution to defray the cost of conducting those examinations.

The Real Estate Commission may allocate a sum of up to five dollars from each real estate broker's, salesman's, and property manager's annual renewal fee to the South Carolina Real Estate Commission Education and Research Fund to be used: (1) to carry out the advancement of education and research for the benefit of those licensed under the provisions of this chapter and for the improvement and increased efficiency of the real estate industry in this State; (2) to provide for the analysis and evaluation of factors which affect the real estate industry in South Carolina; and (3) to provide for the dissemination of the results of the research.

The funds collected from the fee authorized in the above paragraph must be deposited in a special fund by the State Treasurer to be used exclusively for the purposes provided in the above paragraph. Withdrawals from the fund must be made upon the written request of the South Carolina Real Estate Commission."

Commissioner to issue license

SECTION 10. Section 40-57-160 of the 1976 Code is amended to read:

"Section 40-57-160. It is the duty of the Commissioner to issue a license to engage in the business of real estate broker, counsellor, salesman, appraiser, property manager, or auctioneer to all applicants who are duly qualified under, and who comply with, all requirements of this chapter and all regulations of the Commissioner. The license must be in such form and size as the Commissioner prescribes and must not be transferable. The licenses expire on June thirtieth of each year."

Commissioner may investigate

SECTION 11. Section 40-57-170 of the 1976 Code, as last amended by Act 94 of 1983, is further amended to read:

"Section 40-57-170. (A) The Commissioner may upon his own motion or a verified complaint together with evidence, documentary or otherwise, presented in connection therewith, making out a prima facie case, investigate the actions of any real estate broker, counsellor, salesman, appraiser, auctioneer, property manager, or any person who has unlawfully assumed to act in either such capacity within this State, and has the power to suspend, revoke, and cancel any license issued under the provisions of this chapter and assess fines at any time where the licensee has by material misrepresentation obtained a license, or where the licensee is found by the Commissioner to be guilty of any of the following acts:

(1) Making any substantial misrepresentation.

(2) Making any false promises of a character likely to influence, persuade, or induce.

(3) Pursuing a continued and flagrant course of misrepresentation, or making false promises through agents or salesmen or any medium of advertising, or otherwise.

(4) Any conduct in a real estate transaction which demonstrates bad faith, dishonesty, untrustworthiness, or incompetency in a manner as to endanger the interest of the public.

(5) Acting for more than one party in a transaction without the knowledge of all parties for whom he acts.

(6) Acting in the dual capacity of broker and undisclosed principal in any transaction.

(7) Representing or attempting to represent, if a salesman, a real estate broker other than his employer without the express knowledge and consent of his employer.

(8) Guaranteeing or authorizing or permitting any person to guarantee future profits which may result from the resale of real property.

(9) Making of dual sets of contracts, written or otherwise, which would falsify the transaction by stating a sales price higher than the actual sales price in an effort to obtain a larger loan from any lender or lending institution or for the purpose of misinforming any governmental agency.

(10) Being convicted in any court of competent jurisdiction of this State, any other state, or any federal court of forgery, embezzlement, breach of trust, larceny, obtaining money or property under false pretense, extortion, fraud, conspiracy to defraud, or any other offense involving moral turpitude, or pleading guilty or nolo contendere to any such offense.

(11) Failing, within a reasonable time, to account for or to remit any monies coming into his possession which belong to others.

(12) Paying a commission or compensation to any person for performing the services of a real estate broker, salesman, or property manager who has not first secured his license under the South Carolina Real Estate Licensing Act. A South Carolina licensed broker may pay a part of his commission on a cooperative basis to a licensed broker of another state if the nonresident broker does not conduct in this State any of the negotiations for which a fee, compensation, or commission is paid.

(13) Failing, if a broker, to place, as soon after receipt as is practicably possible, any deposit money or other money received by him in a real estate transaction in a separate real estate trust or escrow account maintained by him in a banking institution authorized to do business in this State, wherein the funds must be kept until the transaction is consummated or otherwise terminated, at which time a full accounting thereof must be made by the broker. Records relative to the deposit, maintenance, and withdrawal of the funds must be properly maintained and made available to a representative of the South Carolina Real Estate Commission upon request.

(14) Violating any provision of law relating to a buyer's freedom of choice in choosing an attorney, insurance agent, or title insurance agent to handle his real estate transaction.

(15) Failing, if a broker or property manager, to deposit all security deposits, damage deposits, advance fees, and rental proceeds received by the broker or property manager on or before the next banking day in a separate escrow or real estate trust account so designated. All such funds except rental proceeds shall remain until the lease or rental transaction expires or is terminated, at which time a full accounting must be made by the broker or property manager. Rental proceeds must be disbursed within a reasonable time after deposit and clearance of the deposit by the bank. Records relative to the receipt, deposit, maintenance, and withdrawal of the funds must be properly maintained and made available to a representative of the South Carolina Real Estate Commission upon request.

(16) Failing, if a licensee, to report to the Commission in writing by certified mail, return receipt requested, within ten days after receipt by the licensee of those convictions set forth in item (10) of Section 40-57-170(A).

A real estate licensee shall disclose on a form approved by the Commission for which party he is acting and shall not receive compensation from more than one party except with the full knowledge and consent of all parties.

(17) Violating any regulation promulgated by the Commission.

(B) (1) The Commissioner may make any public or private investigation which he considers necessary to determine whether any person has violated this chapter or any order or regulation hereunder, or to aid in the enforcement of this chapter or in the prescribing of regulations and forms thereunder.

(2) The Commissioner may require or permit any person to file a statement in writing, under oath or otherwise as the Commissioner determines, as to all facts and circumstances concerning the matter to be investigated.

(3) For the purpose of any investigation or proceeding under this chapter, the Commissioner or any officer designated by regulation may administer oaths or affirmations, and upon his own motion or upon request of any party shall subpoena witnesses, compel their attendance, take evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts or any other matter reasonably calculated to lead to the discovery of material evidence.

(4) Upon failure to obey a subpoena or to answer questions propounded by the investigating officer and upon reasonable notice to all persons affected thereby, the Commissioner, through the Attorney General, may apply to the circuit court for an order compelling compliance.

(C) The Commissioner may:

(1) Issue an order requiring a person to cease and desist from any unlawful practice and to take such affirmative action as in the judgment of the Commissioner will carry out the purposes of this chapter if, after notice and hearing, the Commissioner determines that a person has:

(a) Violated any provisions of this chapter.

(b) Directly or through any agent or employees knowingly engaged in any false, deceptive, or misleading practices in the sale or rental of real estate, including advertising and promotions.

(c) Violated any lawful order or rule of the Commission.

(2) Make findings of fact in writing that the public interest will be irreparably harmed by delay in issuing an order and in such case may issue a temporary cease and desist order. Prior to issuing the temporary cease and desist order, the Commissioner, whenever possible by telephone or otherwise, shall give notice of the proposal to issue a cease and desist order to the person. Every temporary cease and desist order shall include in its terms a provision that upon request a hearing will be held promptly to determine whether or not it becomes permanent."

Commissioner to notify applicant

SECTION 12. Section 40-57-180 of the 1976 Code, as last amended by Act 94 of 1983, is further amended to read:

"Section 40-57-180. Before refusing, suspending, or revoking any license and before issuing any public or private reprimand or assessing any fines, the Commissioner shall notify the applicant or licensee of the charges against him and must grant him an opportunity to be heard. The hearing must be held not less than thirty days nor more than ninety days after the applicant or licensee is notified of the charges against him. If charges are brought against a salesman, his broker must also be notified of the charges. Hearing of the charges must be at the time and place designated by the Commissioner and must be conducted in accordance with the State Administrative Procedures Act."

Failure to renew

SECTION 13. Section 40-57-240 of the 1976 Code is amended to read:

"Section 40-57-240. Any real estate broker, counsellor, salesman, auctioneer, appraiser, or property manager who fails to renew or register his license annually and continues to engage in such business is guilty of a misdemeanor and upon conviction must be punished by a fine of not more than five hundred dollars or imprisonment of not more than six months, or by such fine and imprisonment, in the discretion of the court."

Hearing

SECTION 14. The 1976 Code is amended by adding:

"Section 40-57-250. After a hearing as provided for in Section 40-57-170, or after entering a plea of guilty in lieu of hearing, a licensee adjudged to be in violation of the provisions of Section 40-57-170 of this chapter, or of any regulation or order promulgated under the authority of this chapter, may be required by the Commission to pay a penalty of not less than twenty-five dollars nor more than five hundred dollars to be assessed and collected by the Commission in addition to such sanctions as set forth in Section 40-57-170. Any party penalized under this subsection has the right of review as provided for in Section 40-57-220."

Time effective

SECTION 15. This act shall take effect upon approval by the Governor.